China Proposes Further Export Restrictions On Critical Mineral Tech, Batteries

China is proposing a fresh round of export restrictions in the latest development of the escalating trade war between Beijing and the United States.

Reuters, citing a document issued on Thursday, reported that China’s commerce ministry has proposed export restrictions on some technology used to make battery components and process critical minerals lithium and gallium.

It comes after the outgoing Biden Administration last week had launched a last-minute investigation into older Chinese-made legacy semiconductors – weeks before Donald Trump’s administration takes over.

Export restrictions

Now China is proposing export restrictions on some technology used to make battery components and process critical minerals lithium and gallium.

According to Reuters, the proposed changes if implemented would expand and revise restrictions to include some of the technology used to make cathodes, components in batteries, as well as methods of extracting and processing lithium.

Some technologies to extract gallium would also be restricted under the proposed changes that are open for public comment until 1 February 2025.

The document reportedly does not say when they could come into force.

Depending on their severity, the proposed restrictions on technology used to process lithium or prepare battery components could hinder the overseas expansion plans of major Chinese battery makers, including CATL, Gotion and EVE Energy, Reuters noted.

Trade war

The United States and China are currently engaged in a trade war that shows no sign of slowing, as President-elect Donald Trump has threatened to sharply raise tariffs on imports from China and other countries.

The trade war between Washington and Beijing has sharply intensified in 2024.

The Biden Administration and the US Commerce Department had in May 2024 announced new tariffs of up to 100 percent on a number of Chinese goods, including electric vehicles (EVs), which they said were designed “to protect American workers and businesses from China’s unfair trade practices.”

US tariffs were also slapped on Chinese steel and aluminium; semiconductors; electric vehicles; batteries and battery components; solar cells; ship-to-shore cranes; and certain medical products.

Then in early December 2024, the US Commerce Department introduced a fresh round of trade restrictions, designed to hamper Beijing’s capacity to produce high-end chips.

The punishing US restrictions included adding 140 companies to the US ‘Entity List’; as well as new export controls on 24 types of manufacturing equipment; restrictions on three types of software tools used for developing semiconductors; and high-bandwidth memory chips.

Tit for tat

Soon after Beijing responded by banning the export to the United States of certain high-tech materials (gallium, germanium, antimony and other key high-tech materials), which it claimed had potential military applications.

And four of China’s top industry associations issued a co-ordinated warning to Chinese companies to avoid buying US chips as they were “no longer safe, no longer reliable” and to buy domestic products instead.

US-based Micron had faced a similar Chinese ‘national security’ ban in May 2023.

The US then responded by raising the tariffs on Chinese Solar Wafers, Polysilicon, and Tungsten.

Meanwhile China’s antitrust regulator opened an investigation into Nvidia over concerns related to its $7 billion (£5.5bn) acquisition of Israel’s Mellanox Technologies in 2019.